The following lots of a particular commodity were available for sale during the year: $\begin{array}{lc}
\text { Beginning invent ory } & 5 \text { units at } \$ 61 \
\text { First purchase } & 15 \text { units at } \$ 63 \
\text { Second purchase } & 10 \text { units at } \$ 74 \
\text { Third purchase } & 10 \text { units at } \$ 77
\end{array}$ The firm uses the periodic system and there are 20 units of the commodity on hand at the end of the year.
What is the amount of cost of goods sold for the year according to the LIFO method?
A) $1,380
B) $1,375
C) $1,510
D) $1,250

Question

Quizplus · Accepted Answer

Under the LIFO method, the last items purchased are the first to be sold. The ending inventory of 20 units would consist of the earliest purchases: 5 units from the beginning inventory and 15 units from the first purchase. Therefore, the cost of goods sold would be the cost of the remaining units: 10 units from the third purchase at $77 and 10 units from the second purchase at $74, totaling $1,510.

The Following Lots of a Particular Commodity Were Available for Sale